Dojo (HowTo)







  Easter Eggs




  Martial Arts

Art of the Deal
Has Apple sold their soul to Microsoft?

By:David K. Every
©Copyright 1999

I have been getting some mail about Apple's latest deal with MS. Many are very concerned that "Apple sold their soul" -- but I'm so excited that my pets are nervous!
The Deal

It is hard for me to get upset because Apple makes a deal with Microsoft. It is a smart thing to do.

Microsoft is big and looking out for their best interests. Sure Microsoft produces bad Software, and they are out for world domination -- but, on the other hand, Microsoft has some reasonable products, and they are just a company -- not the antichrist. Microsoft needs to be watched, never trusted completely, called on their very checkered history, and judged objectively -- but being objective goes both ways; not just remembering the bad, but also the good. Excel, Word, Office and other products have done some good for the Mac market, even if I don't like them. IS/IT managers and Wall Street worship at Microsoft's feet, and ask to kiss Bill Gates' ring (and I won't mention which ring).

This deal with Microsoft is a PR coup for Apple that has already paid off in free press or stock response. It changes the mindless IS/IT managers' perceptions of Apple. It changes the public's perception of Apple, and it shoves a healthy dose of fear and respect into Apple's enemies.

The deal can be read about all over the place. Basically it is as follows --

Apple got verbal support from Microsoft, and a commitment to keep Office up to date for 5 years (something Microsoft was probably already planning to do anyway). Microsoft bought $150 million (non-voting stock), and agreed to pay Apple an undisclosed sum (probably the same $150 million or so), all for 5 years use of some patents (that MS was already using for free). Apple gets use of Microsofts patents -- but is unlikely to use them. Apple also has to use Internet Explorer as the default browser (not the only browser -- just the default) for MacOS (which Apple probably didn't mind doing anyway).

Doesn't sound too bad to me!

$150 million is petty cash to Microsoft, and not even that significant to Apple. However, the PR and support were very valuable --

  • Apple's stock value went up over $1 BILLION (with a B!). That isn't counting the bonds. Think about that. That is a BIG win for Apple (also with a B!).
  • There are many people today who are considering Macs and Apple that weren't taking Apple seriously a week ago! Apple went from obscurity to "player" (in many people's minds).
    Ignore the idiots who are talking "merger" or "bail out" -- they couldn't find their butts with their thumbs! We know that nothing has changed -- but if you can scam the followers by this deal, then who cares! Apple won one! Jobs pulled a Jobs, and everyone was sucked into the reality distortion field.

Apple was one of the most heavily "short sold" stocks out there (people betting against Apple). Almost 10% of the total company's value was from people betting AGAINST Apple. Think how burned they all got! That is a nice harsh life lesson for them! Bet they won't quickly sell Apple short again! That alone is worth the deal. It earns Apple some respect -- something they needed.

Analysts have all been upgrading Apple. So what if Wall Street is in love with Microsoft and spins accordingly -- Apple won! Wall Street Journal and some others will try to counter-attack and minimize the issue, and sensationalize Microsoft's part (they don't want Apple to win big, because it shows them for the idiots they are) -- but they can't do too much about it.

Consumers are far far less concerned about Apple now than they were a week ago. That WILL translate into millions or even billions of dollars in sales. It may even turn the anti-Apple press-powered hype-machine around -- it has certainly slowed it in its tracks.

Netscape / Sun

I use Navigator as my primary browser -- but I must admit that Explorer (for Mac) is pretty good as well. Netscape Navigator is nice... but is also a big bloated pig. Communicator is worse. Explorer is the lightest-weight browser out there. So from a technological point of view, I can't disagree with the decision. (Even if I don't trust what Microsoft may do tomorrow with IE, it is better in many ways today!).

Apple has been trying to deal with Netscape for a while. Netscape has responded by treating Apple as a second class citizen. (Slow releases, no PR, supporting BeOS, not even talking about Apple, promising an undelivered CyberDog Browser, etc.) All of a sudden Apple makes nice with MS, and Netscape is burned for ignoring Apple. I'll bet that in the future Netscape will try much harder to keep Apple's attention -- now that they remember that Apple is an important customer. Netscape earned the burn! Netscape now needs Apple more than Apple needs Netscape -- and Netscape knows it. Apple can play Netscape accordingly.

Sun is about the same. Sun was not interested in treating the Mac as a preferred platform, or even keeping them up to date. They paid lip service, and that was about it. Sun wasn't that interested in licensing OpenStep, Sun wasn't mentioning Apple in the press releases or road tours, and basically Sun's attention was focused everywhere else. I bet they're paying attention now! Apple and Microsoft are almost in control of Java. Sun had better start taking Apple seriously.

This deal was pure hype and genius on every level. I could give Jobs a big sloppy kiss!

More important than what did happen, is what COULD happen. Diplomacy works best when you have a really big gun pointed at the other diplomat's head... with the safety off! It is just amazing how reasonable they get!

The tip of the iceberg!

So even though the Apple and MS deal an some interesting starting point -- I think the REALLY impressive stuff is yet to come. Can you say OpenStep?

At this point I will delve into the dark underworld of rumor and speculation. So take it for what it is -- Rumors of negotiations, with a little psycho-analysis (pun) and wild predictions! Heck, it's your basic every day analysis -- just with a little more honesty in the disclaimer!

Microsoft fears "not being in control." They fear losing mind-share. Basically they fear Java/Sun/IBM more than they fear Apple and OpenStep. (Even paranoids have enemies!) So why not partner with Apple in a bigger way -- especially if Apple has the tools to bludgeon Sun/Java into submission!

This is the old adage, "The enemy of my enemy is my friend." Not always true, but somewhere to start negotiations.

If Microsoft were to cut a deal to use OpenStep as the basis of their Java Development, then Apple and Microsoft would just rip control of Java away from Sun.

JavaBeans can not hold a candle to OpenStep. So Apple and Microsoft would become THE controllers of Java -- not the followers. There would still be a place for JavaBeans, but for serious Java Development, and vertical application development, people would turn to Apple/Microsoft (OpenStep). OpenStep compliments almost all of Microsoft's goals. Apple would instantly be catapulted from an interesting side note -- to the creator of the premier development technology -- and also would have the premier delivery and development tool, and of course the premier OS to run it on (but MS isn't scared of that). This is great for Apple, and better for Microsoft than the alternative (having Java make them insignificant).

Apple would be gambling that it could make Rhapsody the premier OpenStep development and playback platform. Microsoft would be gambling that they could stop the momentum and mind share shift going towards Sun, and divert it back towards themselves (and Apple). Microsoft is figuring (of course) that at a later date, they can just diverge from Apple's flavor of OpenStep (or add enough value to their own) that they stay the biggest. Apple is betting that they know OpenStep better than MS, and on an even field, they can win (or get a bigger piece).

If Microsoft supports OpenStep, then the developers and consumers definitely win. Users WILL be able to get apps that run on many OS's at the same time. Microsoft will probably focus on the Java side, but it'll spill over to all Apps. Users will get everything that was promised in Java, and more (faster and with a better UI). Java had the sizzle, but this is the steak! If this happens it won't just sizzle, it'll burn the house down -- Yee Haw!

OpenStep for Microsoft is jumping from one fire, into another. But it is a smaller fire -- with a lot more fuel. So Microsoft has to be careful -- but they really don't have much choice. I think Gates realizes that if they don't do something now, they are going to crash and burn like IBM in the 80's. They can't lead unless they have a really compelling reason for people to follow, and OpenStep is a damn good reason!

I think Apple will get far more control than MS hopes --but Apple will not retain the control that they hope either. But the users still win --they will get far more opportunities to use the Mac interface. Developers get a better tool, which means better apps, and both tools and apps will available on BOTH platforms. Microsoft gets out of an anti-trust suit. Apple catapults from obscurity to player. This is good for the industry, and all involved.

The Sword of Damocles!

In fact for Apple to win, Apple and Microsoft don't even have to make the deal.

Apple can now go to Sun and IBM, and threaten that they are going to make the deal. Just that threat alone can scare IBM and Sun into buying in to OpenStep. If the Sun/IBM start going that way, then MS will as well, because Gates and Co. are smart enough to realize what a threat OpenStep is! Apple has the carrot AND the stick, and no one can retain their sanity with the sword hanging over their head -- the sword being "the other guy might scoop us!"

Sun - Rhapsody and PowerPC makes Solaris and Sun Servers insignificant (Suns Unix based OS and Hardware). PowerPC's are faster. Rhapsody is better, has more Apps, and is as robust. Poor Sun, they better make real nice with Apple and use OpenStep, or they are road kill. So Sun had better get on board, or this bus will run them over.

IBM - They want to have lots of commercial Apps for their RS/6000 and S/390's. They've been trying to do it with VisualAge, Lotus Notes, and now Java. But OpenStep is better than any of those. IBM takes time to respond, so they've learned to cover ALL bets (by betting with all sides). They'll probably buy into OpenStep just for safety. This will be a big win for their customers AND for Apple!

MS - Whether they are serious or not, if Apple starts getting others on board, then MS will probably play along. They will still try to add value with ActiveX (gag) and other Microsoft-isms -- but they don't want to be left behind!

Others - They are the ones that should jump on board first (if they are smart)! They have the most to gain from OpenStep Apps. If the little guys like HP, SGI, etc., see the momentum shifting towards OpenStep, then they too have to climb on board. If they wait too long, then the train will be going too fast and rip their arm off. So they will want to jump early. There is a lot of reward, and OpenStep allows for a lot of specialization.


Jobs likely made the Microsoft deal, not only because it was good in its own right, but it also put him (and Apple) in the enviable position of playing one side against the other -- with Apple being the winner if any side (or all) responds, and no side is able to take the risk of NOT responding.

If any of these deals go through, then the others will panic and sign as well.

I'd expect that Apple will be seen as an innovator again, and there will be the responding up-swing in Mac Systems.

Then the mind-numbed reporters will look stupid if they keep bashing Apple (especially if Apple is teamed with their Golden-Child, Microsoft -- not to mention the rest). So the Press will likely play Steve Jobs as the second coming, "able to pull Apple from the jaws of death, to raging success." Of course the truth isn't quite so extreme, but if they were sensationalizing the demise, then they have to sensationalize the recovery -- or people will know that they were exaggerating the first time! (See Butt-Covering 101).

Think of the free PR, think of the ability to hold your head up high and admit you have an Apple Macintosh -- without getting scorn and ridicule from the mind-numbed readers of PC-Week! Think of being able to defend the truth without being called a zealot!

Sure Apple will be riding a tiger (Microsoft, or the others) and betting that they can control them, or at least hang on and beat them to the finish lines. Microsoft will be betting the same thing right back. That's what makes it interesting. But either way, Apple wins -- they will be doing far far better than ever before.

If Apple can only hang on for a while, they still win and are in a better position. Jobs probably doesn't care! Either way his OpenStep will be used everywhere, and that is what probably matters most to him!

Send Steve Jobs my love. He may be an arrogant prick (as many accuse him of), but he may have just earned the right to be!

There is a strong rumor (multiple sources) about why Microsoft is dealing. The rumor is that Apple found a major "gotcha" in the Canyon/Microsoft/Apple suit [MS-Ripped off QuickTime code] -- and that Apple would have won the suit for rewards up to $1 Billion. Rather than a protracted battle and a PR-War, Jobs felt that the political maneuvering was worth more -- he may be right. The downside is that we can't all thumb our noses at MS apologists and point out that they always steal Apple's technology (but we still know it's true). MacOS Rumors had a blurb on this (and I had independent confirmation).

Remember when people were saying that Jobs may have been the one to sell those 1.5 million shares a couple months ago? I said, "if it was Jobs, then it is time to buy -- because last time he did that ('85) Apple's stock doubled in value." Well, history may have repeated itself. From now on, when he sells, I buy!

Think of what it is like to lose $15 million, because you couldn't wait a month or two! Think about what it's like to be rich enough to not care!

Created: 08/09/97
Updated: 11/09/02

Top of page

Top of Section